LOCAL government units (LGUs) next year will be getting their respective shares from a much bigger total National Tax Allotment (NTA) of P959.04 billion for 2022, the first year of implementation of the Mandanas ruling.
The Department of Budget and Management (DBM) finally issued Local Budget Memorandum 82, which stated that the next’s year’s level of NTA—formerly known as Internal Revenue Allotment (IRA)—will be higher by 37.89 percent or P263.5 billion than the share of LGUs this year at P695.49 billion.
If the Mandanas ruling was not implemented in 2022, Budget Undersecretary Laura Pascua told the BusinessMirror that LGUs would only receive P846.31 billion based on the computation from the Department of Finance.
However, the final figure for the total 2022 NTA level is lower compared to the previous estimate of P986.44 billion.
Finance Assistant Secretary Maria Teresa Habitan told the BusinessMirror that the final figure specified in the memorandum was “based on the final submission by collecting agencies.”
Nonetheless, 34 percent of the total NTA or P326.07 billion will be divided among 1,488 municipalities. Meanwhile, 82 provinces will get their share from 23 percent of the total or P220.58 billion while another 23 percent will be allocated to 146 cities. As for the remaining 20 percent or P191.8 billion, this will be distributed to 41,933 barangays.
The total 2022 NTA shares of LGUs was based on the certifications of the Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and the Bureau of the Treasury (BTr) on the actual collections of national taxes in 2019.
Broken down, P765.2 billion came from BIR, P193.74 billion from BOC and P101.065 billion was sourced from other agencies as certified by the BTr.
The Supreme Court’s Mandanas ruling expanded the basis for the computation of IRA to include collections not only of the Bureau of Internal Revenue but also the customs duties collected by the Bureau of Customs, a part of taxes collected in Bangsamoro Autonomous Region in Muslim Mindanao, taxes from the exploitation of national wealth, excise tax on tobacco products and other taxes provided in the National Internal Revenue Code and franchise taxes.
To mitigate the fiscal impact of the Mandanas ruling, certain functions of the national government will be fully devolved to LGUs not later than the end of 2024.
Despite the big hike in NTA shares of LGUs with the implementation of Mandanas ruling, the DBM said LGUs should expect the downtrend of NTA in succeeding years, particularly in 2023 and 2024, given the lower revenue collections of the government in 2020 and 2021 due to lockdown restrictions imposed amid the Covid-19 pandemic.
“In this regard, the LGUs are encouraged to plan out their spending not only for FY 2022, but also for the next two [2] years, and to proactively strengthen and enhance their local revenue generation capacity to meet the increasing needs of their constituents and efficiently manage their cash flows to mitigate the said expected downtrend of NTA in the said years,” the DBM said.
In addition to the NTA, some LGUs are entitled to special shares in the proceeds of national taxes.
These include share in the proceeds from the utilization and development of national wealth within their territorial jurisdiction; excise tax on Virginia tobacco cigarettes, excise tax on Burley and Native tobacco products; gross income taxes paid by all businesses and enterprises within the ecozones; value-added taxes and share in fire code fees.